Matters:
The company released its 2024 quarterly report. 24Q1 achieved total revenue of 46.48 billion yuan, an increase of 18.1%, and net profit to mother of 24.07 billion yuan, an increase of 15.7%. Sales repayment was 46.26 billion yuan, up 29.3%; net operating cash flow was 9.19 billion yuan, up 75.2% year on year. Contract debt at the end of Q1 was 9.52 billion yuan, down 4.60 billion yuan from the previous month.
Commentary:
Q1 Revenue remains steady, and the wholesale channel is growing at an impressive rate. The company's Q1 revenue also increased 18.1%, performing well.
By product, Maotai liquor also increased by 17.7%, mainly due to accelerated catalytic superposition delivery during the peak season of the Spring Festival.
The revenue of the wine series was 5.94 billion yuan, up 18.4% from the same period. The growth rate narrowed month-on-month. This was due to Maotai's 1935 active control and sorting channels to maintain healthy operations. By channel, the revenue of the wholesale channel/direct sales channel also increased by 25.8%/8.5%, and direct sales accounted for 42.2%, down 3.4 pcts from '23. This is due to the accelerated delivery progress of traditional dealers, compounded by the slowdown in the growth rate of i-Maotai (the same increase of only 9.0%). By region, domestic/foreign revenue increased by 17.7%/23.6% respectively, and the international strategic layout progressed rapidly.
Cash flow performance was excellent, and profits were pressured in the short term by tax burdens. The Q1 gross profit margin was 92.6%, the same as the previous year. The sales tax rate was 15.7%, up 1.6 pcts. It was mainly due to the increase in the consumption tax base driven by rapid price increases in the previous quarter, compounded by disturbances in the production and transit pace in the first quarter. The sales cost rate/management expense ratio was +0.5pct/-0.7pct year-on-year. Overall, the net interest rate for Q1 was 52.6%, down 1.1 pcts. Excluding tax rate disturbances, the net interest rate was 54.2%, an increase of 0.5 pct. Profit performance is still steady. In terms of cash flow, sales repayments also increased by 29.3%, and net operating cash flow also increased by 75.2%, all far exceeding the revenue growth rate. They were mainly driven by an increase in sales revenue, combined with an increase in net increases in deposits with the central bank and interbank accounts. Contract debt was 9.52 billion yuan, a decrease of 4.6 billion yuan over the previous year, and an increase of 1.19 billion yuan over the previous year. It is still relatively high, and there is still enough energy left.
Prices stopped falling and rebounded, returning to a steady state range. As the industry entered a low season in the early stages, combined with Xunfeng wine volume expectations, the wholesale price of Flying Sky once fell to 2,500 yuan and hit a low of nearly two years. Subsequent cooperation from various parties led to a quick stop decline and stabilized to around 2,600 yuan, and it is expected that fluctuations will pick up in the future. First, the low peak season has increased markedly in recent years. The April batch price is usually extremely low during the year, and the price trend can be expected to stabilize along with subsequent industry recovery; second, the current batch price has entered the expected price of dealers to stock up, and it can be seen that dealers spontaneously stocked up prices to promote price restoration; third, the company's current good start ended successfully. In addition to measures such as canceling the unpacking policy, it is expected that Q2 will slow down the pace of delivery slightly, and prices are expected to return to a steady state.
A high-quality start will build the foundation for the whole year, and move internationally to create an overseas growth pole. Strong performance in the first quarter lays the foundation for the whole year. More strength is expected to continue to contribute to the increase in performance after the second quarter. First, on the product side, Maotai Liquor is expected to maintain a sharp rise in volume and price, and the combination of price increases for standard Flying Sky products combined with non-standard volumes will contribute to performance growth. Second, the ratio of group purchases/direct management at the channel level is expected to continue to increase. Online Xunfeng/i Maotai integrated development, and offline Maotai product collections will be set up to further link high-end wine customers with Tan Liquor Storage. Third, the internationalization strategy has been further promoted at a strategic level. Overseas revenue increased by 23.6% in 24Q1, which is already beginning to bear fruit, and growth can still be expected throughout the year.
Investment advice: A good start. Looking forward to the same growth trend throughout the year, maintaining the target price of 2,600 yuan and the “strong” rating. The company ended successfully in the first quarter. More efforts were made after the second quarter. Flying price increases contributed to price increases, increased group purchases/direct management unleashed potential, and internationalization progressed further. The certainty of performance remained the same throughout the year. We maintain our 24-26 EPS forecast of 70.04/80.81/91.79 yuan, maintain a target price of 2,600 yuan and a “strong push” rating.
Risk warning: Consumption recovery has fallen short of expectations, some reform measures have fallen short of expectations, and prices have declined.